When it comes to business and investing decisions, understanding the most accurate measures of market performance and trends is paramount. The McClellan Oscillator is a popular indicator that is commonly used to judge the strength of the market, and is particularly advantageous when it comes to investment grade bonds. By studying the oscillator, investors can gain insight into the market’s strength and use this as the basis for their investment decisions.
The McClellan Oscillator is a momentum based technical indicator that was developed by Sherman and Marian McClellan in 1969. It compares the difference between the number of advancing stocks and declining stocks on a market index or exchange. This is done by subtracting the 39-day exponential moving average (EMA) of the net direction of the stocks (advancing minus declining) from the 19-day EMA of the same data.
When the oscillator reads above 0, it indicates that the trend of the market on the index is bullish, meaning that the market is increasing in strength. Conversely, when the oscillator reads below 0, it indicates that the trend of the market is bearish, meaning that the market is decreasing in strength. By analysing the data provided by the oscillator, investors can quickly identify the strength of the market as it relates to their investments.
The McClellan Oscillator is particularly useful when it comes to judging the strength of investment grade bonds. After all, the objective of any such bond is to provide a steady, secure return on investment. Investment grade bonds must have credit ratings of BBB- or higher, and the McClellan Oscillator can help investors determine if the bond will be a safe and reliable return on investment or not.
By studying the data provided by the McClellan oscillator, investors will be able to understand the market trends and make informed decisions on whether to invest or not. The oscillator should only be used as part of a comprehensive market analysis that takes into account other factors such as the credit rating of the bond and its past performance. By incorporating the oscillator into their investment strategies, investors can increase their chances of making successful investments in investment grade bonds.
